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Should Text Book Publishers Fear Kindle DX?

Well, according to the rumors, yes.

Amazon.com Inc. on Wednesday plans to unveil a new version of its Kindle e-book reader with a larger screen and other features designed to appeal to periodical and academic textbook publishers, according to people familiar with the matter.

Beginning this fall, some students at Case Western Reserve University in Cleveland will be given large-screen Kindles with textbooks for chemistry, computer science and a freshman seminar already installed, said Lev Gonick, the school’s chief information officer. The university plans to compare the experiences of students who get the Kindles and those who use traditional textbooks, he said.
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Amazon has worked out a deal with several textbook publishers to make their materials available for the device, Mr. Gonick added. The new device will also feature a more fully functional Web browser, he said. The Kindle’s current model, which debuted in February, includes a Web browser that is classified as “experimental.” (WSJ)

Are the text book publishers that are working with Amazon thinking clearly?

Amazon has already put the fear of God into trade book publishers with their heavily discounted NYT Best Seller titles for the Kindle. Who’s to say that Amazon won’t also do something similar with text books?

I can see it now. Hello student! You know that text book your professor says you have to buy? Yeah, the one in the book store that costs $150? Well, look no further. Get your Kindle edition for $39.95.

What student wouldn’t immediately jump on a deal like that? Sure, the discount isn’t likely to be that deep (is it?), but the fact that the book will be discounted is enough for the student to happily slap down dad’s credit card.

Text book publishers need a digital strategy, to be sure. Most STM publishers have been digital for years now, so models exist. If text book publishers are hoping Amazon makes their digital market, they’ll won’t be happy at the end of the day. They’ll watch their print sales drop along with the revenue they depend upon. Amazon can be a great channel partner, but no one should give them control of that channel.

MORE: Engadget has a video and details of the new Kindle DX hardware.

Lexcycle Acquired by Amazon

Lexcycle, the company who created the Stanza book reading software for the iPhone, has been acquired by Amazon.com.

Stanza allows users to browse a library of around 100,000 books and periodicals for the iPhone, many of them in the ePub format — a widely accepted standard for e-books that Amazon has yet to support with its proprietary Kindle platform.

In its blog post, Lexcycle said, “We are not planning any changes in the Stanza application or user experience as a result of the acquisition. Customers will still be able to browse, buy, and read ebooks from our many content partners.”

It is not clear how much Amazon is paying for the year-old company with offices in Austin and Portland. But the move indicates Amazon wants to consolidate its position on mobile devices, particularly within Apple’s ecosystem, which may include a tablet computer later this year. The Lexcycle team should also help Amazon stake out ground on Google’s Android phones, the Palm Pre and Windows Mobile devices — and perhaps eventually turn to more open e-reading formats.

“It’s very early days for e-books, and we believe there is a lot of innovation ahead of us,” said Cinthia Portugal, a spokeswoman for Amazon.com. “Lexcycle is a smart, innovative company. and we look forward to working with them to innovate on behalf of readers.” (NYT)

eBook sales last year were about 1.5% of all sales, so there’s lots of room to grow. Amazon has a huge stake in the business with its Kindle eBook reader and sales of Kindle compatible eBooks. The question now is, will Stanza continue as a product or will Amazon throw it away and steer Stanza users towards its iPhone Kindle app? Amazon needs customer names, they don’t need a second iPhone app.

Congrats to the guys at Lexcycle. Just last week I listened to Neelan Choksi at the London Book Fair. No wonder he had a perma-smile on his face! 🙂

University Presses React to Soft Economy

Most university presses are realizing a decline in revenue in this current economic climate. But rather than whine about it, some are seeing opportunity. Of those, the press at Massachusetts Institute of Technology (MIT) is taking opportunity to the next level: action. The answer? eBooks.

In today’s soft economy, the eBook system has acted as a way out of financial shortcomings. According to Rebecca Schrader, Assistant Director of Finance of MIT Press, a large portion of the university press’ e-book sales comes from users of the Amazon Kindle, a portable e-book reader that has access to over 250,000 books.

According to Schrader, university presses throughout the country have experienced similar declines in sales. A recent survey published by the American Association of University Presses estimates an average 10 percent loss in sales and revenue between July and December 2008.

As a result of declining earnings, university presses are also starting to take different approaches to their business models.

And MIT isn’t alone in their need to shift focus from print only to print+eBook publishing. Yale, Cornell, and the University of Michigan Press also plan to cut back and increase their eBook publishing programs.

While it’s no surprise that text book publishers are heading toward broader eBook publishing initiatives quicker than the general book publishing industry, what university presses learn along the way will be of great help to the big houses in NYC and others around the country. That is, if they’re paying attention.

Verizon and AT&T Want a Piece of the eBook Business

Envy: it’s a powerful thing.

Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T) are both looking at e-book readers as a new source of income, having eyed up the success of Amazon’s Kindle, which uses Sprint (NYSE: S) Nextel’s network to allow consumers to download digital books to their devices. The e-reader interest is part of a larger drive to find additional wireless devices to connect to networks, as the US’s wireless market for cell phones reaches saturation point.

Bloomberg quotes AT&T’s head of emerging devices Glenn Lurie as saying the Kindle has done a “phenomenol job” and that the network wants to be part of that market. Lurie told the news service, “There’s a whole bunch of ways to monetize that type of device. That’s coming, it’s coming fast. We’re going to be part of it.” Lurie didn’t mention any potential partners, however, or any timing on when such a device might be available.

The key sentence here is, “there’s a whole bunch of ways to monetize that type of device”. Sounds like part of that monetization could be ads. Like, popup ads, and ads embedded into content, like right in between paragraphs on the page of your most favorite novel.

Hope I’m wrong.

Obsessed With Book Smell?

Think the eBook discussion focuses too heavily on the tactile differences with print? Over at Booksquare, it’s OK to let digital books be different from paper books. I agree.

Now…about that bacon smell, you just might have something there, Kassia.

Do eBooks Have to Fail?

I read with interest a post from Evan Schnittman of Oxford University Press which outlined conflicts between a current print publishing business model and the emerging eBook business model. According to Schnittman, the incompatibilities between the two models means that consumer stand-alone eBooks must fail in order for existing print models to continue.

How does the publishing industry fund the creation, editing, design, production, marketing, e-warehousing, and sales of ebooks, if the income isn’t there? How do ebooks cover the huge advances needed to buy books if we cannot generate the cash, especially at their extremely low, discounted prices, cover the advances that an entire industry has come to require? The answer is that ebooks, alone, cannot.

What this means is that unless a very different model evolves, ebooks can never become the dominant version of content sold by book publishers. It means that ebooks will always be priced to sell, but sold as an afterthought, not as the primary version of a work. It means that the need for blended e plus p models will evolve, in order to take advantage of all the great qualities of ebooks, while providing the financial support and structure that print offers. It means that consumer ebooks, as a stand-alone version of an intellectual property, must fail.

As you can imagine, there’s lots of opinions expressed in the comment section of Schnittman’s post. Many mention the obvious: that print business models must change in order for publishers to survive (and thrive in) the eBook business. Thinking up a new model might be easy enough, but what about changing the culture inside these publishing houses? It seems publishers are their own worst enemies in this regard. The “we’ve always done it this way” thinking is a major contributor to the less than sound decisions book publishers make when it comes to eBook development, marketing and sales. What else explains their habit to instantly apply existing print models to the eBook business? Their entire infrastructure is built upon the print model, so it’s no wonder they struggle.

  1. Publishers need to have the will to bring in new people (i.e. new ideas) and avoid the career folks who’s corpus of knowledge is based on the past 3 decades (or more) of the book publishing business. They need to implement an eBook business model that eliminates the risks inherent in the print model. There are already a few out there that they can adopt. Once they do…
  2. They need to develop a direct relationship with the end-user customer so they can effectively execute the eBook model.

That’s a tough road to travel though, since the book publishing industry has, for the most part, completely avoided the customer and embraced the retailer. Of course, this all made sense before the Internet. Unfortunately, book publishers didn’t grasp the importance of the customer relationship when the web came along, and now they have allowed Amazon, Google and others to own the critical data. Amazon not only knows where the customer lives, they know his buying habits, and more importantly they know his credit card number. How many publishers have any of this stuff? How many publishers recognize the value in it? How many would know what to do with the data if they had it?

The success of the eBook business for traditional book publishers will depend on the relationship they have with the end-user customer. Every day they willingly give this away, they lose the one sales channel that will matter most. Yet, none of this will matter if they continue to embrace the vicious cycle of today’s print business models.

Move Over Kindle: New eBook Readers Enter the Market

Samsung and Fujitsu enter the market with eBook reading devices.

Let me say up front that I’m not a big fan of dedicated eBook hardware. Call me jaded ever since I bought the Rocket eBook (now living in a cardboard box somewhere in my garage). I’ve seen/held/experienced most all of the gadgets on the market, and while many of them include compelling feature sets, and adequate reading experiences, they remain elusive to the broad consumer market due to high prices and complexity. Until these constraints decrease, devices like these will remain locked within the realm of the early adopters.

Book Publishers Want To Keep DRM Alive

As long as book publishers have a say, DRM, or Digital Rights Management, will be around for a long time. Yet while most every consumer of digital products has encountered DRM in some form, an almost equal percentage of customers hate DRM with every fiber of their soul. But publishers aren’t swayed by what bugs customers. Why? They don’t know who their customers are. They don’t talk to them, they hardly hear from them, and they rarely consider their preference when building digital products.  When the book publishers customer is a retail partner, the end-user is just a number. And numbers rarely tell you more than what sold and what didn’t sell. Numbers don’t tell you why. And therein lies the problem. Many say the book publishing industry is headed down the same road as the music industry.

You see, it was those record executives who decided to lock music up on CDs and hard wire digital files to proprietary music players. They thought that would solve all their business model problems, but it didn’t. The MP3 music format waltzed in and before they knew it Napster came along and permanently changed their industry. Now, some 15 years later, and after tens of millions of dollars in losses, they are finally coming around to the notion that customers want to download music and play it on their iPod, their computer, and burn the same files to CD. And you know what? Those customers made iTunes the biggest selling music retailer in the world.

Yet book publishers believe their fate is somehow different than that of the music industry. In the opinion of some, DRM is the only way they can protect their authors and remain viable. That may be true, so long as authors need publishers, and many of them are proving they don’t. More and more writers are publishing books themselves, marketing them on blogs and through social media, and giving away digital editions. And the funny thing? Their print sales are increasing, not decreasing. Just ask guys like Chris Anderson, and Cory Doctorow. Their success should scare book publishers to death. But are they listening? Are they aware? Do they know the real answer is less DRM? In a word, no.

I’m not total advocate for unprotected eBooks. In some categories, proprietary eBooks are successful because they are tied to powerful search software, or unique value added hardware appliances. Yet in the general trade category, fully DRM’d eBooks have a short shelf life. Their complexity and restrictiveness only frustrate the end-user.

NPR recently aired a story on the subject of DRM (catch it here). I think the viewpoint of the end-user and the publisher is represented well. I can’t help but listen to it and feel like history is replaying itself. A tough business lesson is about to be taught once more.

Publishers Turn to Scribd

Book publishers have had a tough go of it lately. Not only is the economic downturn hitting them especially hard, they must contend with a growing consumer desire for digital content. But what do you do when you’re only known for publishing words on paper? You partner with technology companies who can help you promote your content. A group of major publishers recently announced a partnership with a company called Scribd, best known as a document sharing website where content is offered by download at no cost. As in, free. More on that in a moment.

So, if promotion is what publishers need  in order to show that they too can play the digital game, why not just use Google Book Search and Amazon? Well, publishers need additional help in promotion if they have any hope at success with digital books. And while Amazon and Google provide plenty of eyeballs, they don’t allow easy sharing of content, something Scribd does with their iPaper technology. Using iPaper, bloggers can share and embed content into their posts. The end result is the book publisher garners the muscle of a cadre of promoters at virtually no cost. Bloggers can help promote both the digital book and the print edition too, and they can do that by sharing much more than just their opinion. Using iPaper, they can embed excerpts, or they can allow for an entire book to be distributed free of charge.

But there’s still that pesky issue of making money. If you’re giving your digital content away in the hopes that someone will buy a print copy, what happens when you want to charge money for the digital copy? Kind of hard to put that jeannie back in the bottle. Many technology consultant types hold to a position that says you gotta give away stuff in order to get people to pay for stuff. I think the jury is still out on that. If I were to give advice to a book publisher, I’d encourage them to give away a free print copy of a book in exchange for buying the digital edition. This way, they begin to build a community of customers who want to purchase pure digital books, and they can go back to them for future digital offerings. Publishers will need to begin to build a direct customer channel and this is one way to do it. Why give customer ownership to other partners? And if they charge for the digital content, they won’t have to face the argument of “you gave me digital books for free before, so why do I have to pay now?” Publishers can still stay focused on their print book partners (see Google and Amazon). Worst case, they’d still sell the same amount of print copies.

Unfortunately, book publishers are being bombarded with the notion that you have to be digital today (that’s true), and as a result, they make hasty decisions. We’ll see if working with Scribd is just another one of these.